A Tale of Two Americas
Recently I was struck by two seemingly unrelated news articles which epitomized the gap between the rich among us and the poor. On February 28th, the Biden Administration announced the end of enhanced food benefits under the Supplemental Nutrition Assistance Program (formerly known as food stamps). These enhanced benefits were temporary benefit increases enacted by Congress during COVID. More than 30 million people will lose benefits with the average family losing $82 in food purchasing power. Several articles noted that food banks will see an increased demand as a result of this action.
The temporary SNAP benefits pushed back against hunger and hardship during COVID. The emergency allotment kept 4.2 million people above the poverty level by reducing poverty by 10% for adults and 14% for children – this according to the Center for Budget and Policy Priorities. In Pennsylvania, nearly two million people will see their monthly allotment shrink by $181/month on average (PA Department of Human Services). This is no small amount for low income families. Yet even with inflation still hovering around 6.5%, Congress saw no reason to reauthorize this emergency food assistance program.
The second story concerned Ray Dalio, manager of Bridgewater Associates, the world’s largest hedge fund managing $125 billion of people’s money. Mr. Dalio agreed to relinquish control of his firm only if he received billions of dollars in payouts over the coming years. The article noted that Mr. Dalio has an estimated net worth of roughly $19 billion.
What is so striking here is that our capitalistic system is not working well for the vast majority of Americans. While the system is working quite well for the Ray Dalios, it is continually spiraling downward for the have nots. How long people will put up with our widening wealth gap (which is the largest of all industrialized nation) is anyone’s guess, but there is no question it is a ticking time bomb in our political and economic system.
In fact, Mr Dalio has raised the wealth disparity issue himself. In 2019, he wrote an article entitled, “Why and How Capitalism Needs to Be Reformed.” Mr. Dalio writes that the wealth gap is “bringing about damaging domestic and international conflicts and weakening America’s condition.” He sees two possible outcomes. Either we re-engineer the system so that “the pie is divided and grown well” or else, “we will have great conflict and some form of revolution.” It should be noted that Mr. Dalio offers no solutions. Nor does he offer to reduce any portion of his own billions.
Mr. Dalio’s observations make a whole lot of sense to me. Yet for whatever reason, we as a country are reluctant to address the wealth gap. Just as we can so easily terminate an enhanced SNAP food program for the working poor, we can ignore Mr. Dalio’s extreme avarice as capitalism at work. In fact, our policies often exacerbate this unfairness. While we ask teachers and police to face a marginal tax rate of 25%, hedge fund managers like Mr. Dalio pay 15% of their enormous incomes based on a tax loophole called “carried interest.” Various proposals such as capping executive pay, creating a wealth tax, or increasing the tax rate for those making over $400,000 have gone nowhere. As a result, the Ray Dalios continue to get richer at the expense of everyone else.
I am not advocating an end to capitalism. This system has produced the wealthiest nation in the world. But what I am proposing is a fairer system – one that asks its richest citizens to pay their fair share. I’m also asking the government to act as a moderating force to assure that all our citizens can thrive economically not just the richest among us.
Tom Deloe is a member of Gettysburg Democracy for America.